Consumer Finance Awards 2025: Investment Bond Provider of the Year
Generation Life has been named Money's Investment Bond Provider of the Year as part of the 2025 Consumer Finance Awards.
- Find out how we chose the winners
- Order your copy of the July awards issue
- Check out more from the 2025 Consumer Finance Awards
A stable of investment bonds - to save for funerals and major expenses, such as a child's education, as well as its popular LifeBuilder - that offers significant estate planning features has helped Generation Life win for the fourth consecutive year.
Here's how the investment bonds work.
Investors purchase investment bonds (once called insurance bonds), which are a single premium life insurance policy, with after-tax money. The life insurance company pays tax on the investment earnings.
The tax rate is 30%, a decent saving for investors on high marginal tax rates of 45% or even 37%. The 30% tax rate on Generation Life's growth investment options can be brought down to 12%-15% by offsetting capital losses against income as well as using franking credits.
For investors to receive the maximum tax benefits, it is best to hold an investment bond for 10 years, making it a long-term investment.
Generation Life has attracted the attention of financial planners and families, explains Felipe Araujo, chief executive officer of Generation Life, and manages $4 billion in funds and offers 69 different investment options across all the major asset classes including diversified funds and single sector funds.
Investment bonds offer some unique estate planning features. A bond can be structured as a non-estate asset, so it doesn't have to be a part of a person's estate or included in a will. It can also bypass probate and can be paid out more quickly before probate is granted. It is regarded as a tax paid investment and there is no tax impact with a death benefit even when it is bequeathed to a minor.
Araujo says one in five Australians wants to pass a legacy onto their grandchildren and investment bonds allow the bond holder to nominate a future beneficiary, such as a grandchild, so that the assets will transfer to them.
"You're transferring assets very smoothly between generations," says Araujo.
This feature is attractive for blended families or those with conflicts between family members. By targeting specific family members, families can avoid their wealth ending up in a marital pool because they are worried that their adult children may split up with their partner.
"One of the benefits of an investment bond is that you don't have to distribute to the beneficiary," says Araujo. In contrast, a family trust distributes the income that the assets are generating every year to different beneficiaries, even in years that the beneficiaries may not want or need the income.
With an investment bond, however, the gains can be reinvested automatically and internally within the structure of the investment bonds on behalf of policy holders. Investment bonds can be held in an investor's personal name rather than in a trust.
Why they won
Estate-planning features for families who want to control when distributions are paid and preserve their wealth for their own descendants
Top products
Tax optimised series, with investments taxed at a maximum 30% and often much less, that includes LifeBuilder and ChildBuilder.
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